Energy Outlook Q1 2014

Outlook to 2020: Navigating the known knowns and the unknown unknowns?

BY SEAN EVERS, MANAGING PARTNER, GULF INTELLIGENCE

January-01-2014

There is no doubt a lot of noise in the short-term echo chambers of the energy barrel, is it ever thus you may holler! But whether it is the so-called “U.S. Shale Revolution” or the so-called “China slowdown” for that matter or the “Renewal of Abu Dhabi Concessions”, they all cloud the immediate horizon, while industry decision making tends to be more focused on the medium-term outlook. It is to 2020 so that we turn our crystal ball in this publication for insights into some of the major trends that will play out over the next five years...Gulf States aren’t just among the world’s largest energy exporters; they are also fast emerging as major energy consumers in their own right, eating into their oil export capacities. OPEC’s domestic oil consumption has increased seven fold in 40 years, with largest member Saudi Arabia now consuming 2.5 million barrels of oil per day, or some 25% of current production, and at this rate of growth energy consumption in the kingdom is forecast to double by 2030.Power demand in the Middle East is set to increase by 76% between 2010 and 2040, the US EIA estimates, thus making a diversification of the region’s energy mix a must. At the same time, energy remains heavily subsidized across MENA. However, voices are rising saying these subsidies aren’tsustainable.Today, Asia is the principal customer for Gulf energy, with as much as 70% of exports from the region now being consumed in India, China and Japan and the Republic of Korea. At the same time Europe is looking for new sources of energy supply to reduce its dependence on Russia, with Turkey sitting at the historic crossroads to be a conduit for much needed oil and gas looking for exit routes from Iraq and Central Asia.National Oil Companies are going global and could have an increasing impact on the direction and dynamics of the present-day petroleum sector. When ranked on the basis of proven oil & gas reserves, 17 of the top 20 oil & gas companies in the world are NOCs. International Oil companies control less than 10% of the world’s proved oil and gas resource base. There are many opinions on where these trends will take us over the coming years, and one voice that will become increasingly stronger is that of Women in Energy who now make-up the majority of science students entering regional universities.